2012 (1) TMI 245 - AT - Income Tax

Summary

Issues involved: Stay of outstanding demand u/s. 254 of Income Tax Act for assessment year 2007-08 pending disposal of appeal filed by assessee.

The assessee filed an application u/s. 254 of the Income Tax Act seeking a stay of the outstanding demand of Rs. 63,85,261 for the assessment year 2007-08 pending the disposal of the appeal filed by the assessee in ITA No. 157/Mum/2012. The Assessing Officer had reduced the claim for deduction u/s. 10A of the IT Act by Rs. 4,83,24,907 and made a disallowance u/s. 14A of Rs. 8,27,276, resulting in the determination of income at Rs. 4,85,13,990. The tax determined by the AO was Rs. 2,33,85,261, including interest of Rs. 72,57,495 u/s. 234B of the IT Act. The assessee had paid Rs. 1,70,00,000 against the demand, which was approximately 72.70% of the total demand, including interest. The assessee disputed the entire tax demand raised by the department in the appeal, emphasizing that the issue of entitlement for deduction u/s. 10A was also pending from the preceding assessment year 2006-07. The Tribunal had heard a similar issue for the earlier assessment year, and the order was awaited. The assessee requested the outstanding demand to be kept in abeyance until the appeal was decided by the ITAT.

The Departmental Representative did not dispute the submissions of the assessee's representative, except for mentioning that the assessee had not stated any financial hardships if the balance amount was also recovered. After considering the submissions of both parties and examining the relevant material on record, the Tribunal found that the balance of convenience favored the assessee. Therefore, the Tribunal granted a stay of the balance outstanding demand of Rs. 63,85,261 for a period of 6 months or until the disposal of the appeal by the Tribunal, whichever was earlier. The assessee was instructed to inform the Registry to prioritize the appeal once the order of the Tribunal regarding the assessment year 2006-07 was received. The Stay Application of the assessee was allowed, and the order was pronounced in the Open Court on 27.01.2012.